9 March 2018
In Support of An Early Mortgage Payoff
Conventional wisdom (aka marketing, banking) has convinced us to get a nice, long mortgage and hold on to it as long as possible. In today’s article, I would like to offer some valid reasons for paying off a mortgage early. As always, every situation is unique and your financial “mileage” may vary. In today’s economy, many citizens are struggling to keep up with their mortgages and doing whatever they can to stay on top of their mortgage payments every month to avoid foreclosure. For many citizens, paying off their mortgages is not only a goal but a dream. Paying off your mortgage has many advantages that can positively impact your finances as well as your quality of life.
Are you ready to be weird?
Financial Security Over the Long Haul
One of the biggest benefits of paying off your mortgage is having financial security over a long-term basis. Without the heavy burden of a mortgage to pay every month, citizens can enjoy financial security over a long period of time. If the money that was formerly being used to pay your mortgage is saved, you can help build a solid nest egg for retirement or for emergencies. Additionally, if you should encounter hard times where money is tight, you will have one less bill to pay, and you will not have to worry about the bank foreclosing on your house.
Flexibility in Your Monthly Budget
Once you pay off your mortgage you will have extra breathing room in your monthly budget. If you were struggling to pay bills before your mortgage was paid off you will be able to redistribute the money you would have paid on your mortgage towards high utility bills, household expenses or another expense that would have left you strapped for cash before your mortgage was paid off. Paying off your mortgage creates flexibility in your budget and makes it easier to keep your family afloat.
Financial Tax Benefits Are Oversold
Some families choose to keep a mortgage for the tax benefits. How much of a tax break is it? The mortgage interest sent to the bank per year on a $200,000 house financed at 3% would be $6,000. A person filing taxes at a 25% tax bracket would save $1,500 with the tax deduction. They are spending $6000 to save $1500.
Financial Freedom to Pursue Other Ventures
A pleasant advantage to paying off your mortgage is that you have the financial freedom to pursue other ventures. Whether you have always dreamed of living somewhere tropical to owning your own business, having extra money in your bank account every month allows you to pursue other opportunities that require financial backing.
Paying off Early Reduces Your Interest Amount
A huge financial liability that homeowners deal with when applying for a mortgage is the hefty cost of interest. The longer you carry a mortgage, the higher your total interest amount will be. By paying off your mortgage early, you are paying significantly less in interest. Once your mortgage is paid off the interest costs cease, and you can apply this money elsewhere.
The Bottom Line
Paying off a mortgage is a dream for many citizens. If this goal is within reach for you and your family it may be a very smart move to satisfy your mortgage balance. Not only will it free up extra money every month, but it provides added financial security during a housing crisis, allows you to save more, or even lets you chase down your dreams that needed extra financial backing. During an age where many people are struggling to keep their homes, paying off a mortgage is definitely a smart move.
Lighthouse Financial Coaching is an Austin-based company dedicated to helping regular families and individuals become organized with personal finance and begin to win with money and move forward to achieve their financial dreams and goals. Schedule your free introductory consultation today. Click www.lighthousefinancialcoaching.net or email firstname.lastname@example.org